From the TUC

Chancellor’s chance to boost renewables business

18 Mar 2013, by in Environment

Three Budgets tests for the Chancellor from the Renewable Energy Association’s first ever business confidence survey:

  • Set a 2030 emissions target for the Energy Bill.
  • Strengthen access to project finance.
  • Commit to amend the system of energy contracts in Energy Bill.

The REA’s “confidence index” stands at just 47% based on six measures of current business confidence and the outlook for jobs and investment.  “An index of around 75% would indicate a healthy and confident industry”, the REA says. Much of what industry has to say today boils down to good governance of industrial policy, or the lack of it, from No. 11.

REA graphic 1

First, the challenge: as the graphic shows, the UK has to achieve a higher growth rate in renewable energy investment than any other Member State to reach its 2020  target. The prize is up to 400,000 jobs by 2020, economic growth and greatly improved energy security. But mixed messages – not least from HM Treasury’s last century preference for fossil fuels – remain a problem. Industry needs policy certainty and political consistency.

The REA reveals a slight overall decrease in employment over the past 6 months. Just under a half of companies reported broadly stable employment levels and nearly as many firms have increased employment, as decreased. Looking forward over the next 6-12 months, 62% of companies expect employment levels to stay the same, and twice as many firms expect to see employment increasing, compared to those expecting a decrease in employment.

It is interesting to note that 43% of the respondents had poor or very poor confidence in their ability to raise finance for their RE business activities. With only 13% having good or excellent confidence, it is clear that the issue of obtaining finance remains a key concern.

This is how concerned industry has become over renewable energy stewardship:

  • 68% of respondents have poor or very poor confidence that the UK will achieve its 15% renewable energy target by 2020. Only 4% thought prospects of meeting the target were good or excellent.
  • 69% think the lack of an emissions target within the Energy Bill sends a poor or very poor signal to investors. 9% felt this sent a fair signal and 4% a good signal.
  • 51% of respondents active in the electricity sector have poor or very poor confidence that Con-tracts for Difference, as set out in the Energy Bill, will be effective in bringing forward renewables generation.

One industrialist summed it up this way: “Too many conflicting signals have been given recently causing doubt as to whether the Coalition has a unified position on promoting a balanced mix in the future UK energy supply, including renewable technologies. There is also doubt that the Government is convinced that renewables have a long term role to play, and a widespread belief that HM Treasury has the upper hand in determining the ultimate rate of market adoption of renewables.”